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TheDairySite Newsletter - 31 May 2013

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Friday 31st May 2013.
Michael Priestley - Editor

Michael Priestley

Good News For Industry as Processors Increase Prices

Milk buyers have shown confidence in a bullish commodity outlook for the coming months, ahead of the World Milk Day on Saturday.

Started by the Food and Agriculture Organisation of the United Nations in 2001, this annual celebration focuses on dairy production across the world.

Ahead of the event, several major processors have announced liquid price increases, including UK farmer co-operative, First Milk.

By announcing a two stage increase of 1.1 pence per litre over July and August, company chairman Bill Mustoe has said that farmers are being passed on returns as fast as possible.

He added that higher value products such as Lake District Cheese and the recently launched Quark range are ways in which First Milk is looking to respond to market demands.

Further price increases have been announced in New Zealand. Dairy co-operatives Fonterra and Westland Milk Products have shown commitment to strong prices in the light of low supplies with opening forecast farmgate prices of NZ$7.00 and NZ$6.60-NZ$7 per kilogram of milk solids respectively.

However, Federated Farmers of New Zealand has warned dairymen that price does not equal profit, and although Westland’s prices offer a ‘buffer’ against volatility, frugality is required for business survival in the light of forage costs.

Average sized herds are costing NZ$1000 every day in forage spend, Dairy Spokesman for Federated Farmers of New Zealand announced this week.

But, such costs may be worthwhile enduring if openings in the Asian market are to be exploited.

This is according to a Fonterra study that found that 72 per cent of 9,000 Asians surveyed see dairy food as part of a balanced diet. However, the survey also found that less than half of the sample actually consumed dairy products every day.

Nevertheless, Fonterra has stated that increasingly affluent populations across Asia are aware of offering families ‘appropriate nutrition.

Current Fonterra strategy is to drive annual average consumption up in Asia, currently at 30 litres. New Zealand consumption is around 245 litres.

Similarly, the importance of a strong dairy sector has been highlighted by the Swedish Rural Affairs Minister, Eskil Erlandsson.

By introducing premiums for large herds of 1000+, the competitiveness of the Swedish sector can be strengthened, he stated.

He outlined the importance of cattle farming because of its contribution to jobs, export earnings and the provision of ‘important environmental assets’.

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